So where are all of the gains in productivity going? Two places: First,… the share of profits has risen faster than wages. Second, the highest paid workers are getting a bigger share of the wages that go to labor. …

The gains in productivity are going to those places. But they are also going to pay for worker benefits, like healthcare. And 401ks. And Medicare and Social Security (including the employer share). The data I got doesn’t go back quite as far, but you can see the productivity and income graphs have the same information as on the chart shown above. The total compensation includes “Wages and salaries of employees plus employers’ contributions for social insurance and private benefit plans. Except for nonfinancial corporations, where there are no self-employed, data also include an estimate of wages, salaries, and supplemental payments for the self- employed,” per BLS.

I’m not saying this chart looks great. I’m just saying that talking about wages alone is very misleading.

Update: The above was published in March 2014. John Mauldin has just published this chart from Doug Short, in August 2016: